THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, HOST: Thanks, Jack very much. And to our viewers, you're in THE SITUATION ROOM. Happening now, relations with a key U.S. ally taking a dramatic and potentially very dangerous turn. Turkey reacting in anger after a controversial vote in the U.S. House of Representatives. You're going to find out what happened.

Also, making bombs, training for holy war -- is this man an American?

We're going to show you some disturbing new video of who's training Islamist militants.

And a frightening arsenal found in the home of a 14-year-old boy.

Coming up, what police believe he was planning.

Also, my one-on-one interview this hour with the former Mexican president, Vicente Fox. He has a message for Lou Dobbs.

I'm Wolf Blitzer and you're in THE SITUATION ROOM.

A strong reaction from Turkey right now. The Turkish government pulling its ambassador from the United States. That after a House committee passed a resolution saying Turkey committed genocide in World War I against Armenians.

Our State Department correspondent, Zain Verjee, is following this story for us and it is escalating literally by the hour -- Zain, what's going on?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: It is, Wolf.

Here at the State Department, officials are doing a lot of damage control. The big worry here today at the State Department is that could Turkey turn from a friend into an enemy.

(BEGIN VIDEO TAPE)

VERJEE (voice-over): Turks take to the streets, tired of supporting the U.S. and having little to show for it. Turkish officials say they just don't trust the U.S., which they thought was their closest ally. They feel betrayed by a Congressional committee vote calling the killing of Armenians by Turks in World War I genocide. Turkey warned of consequences and now it's making good on its threat, recalling its ambassador the U.S. for consultations.

TOM CASEY, STATE DEPARTMENT SPOKESMAN: That is their decision. I think that it certainly will not do anything to limit our efforts to continue on reach out to Turkish officials.

VERJEE: Turkey is threatening more action if the resolution passes the full House.

EGEMAN BAGIS, FOREIGN POLICY ADVISER TO TURKISH PRIME MINISTER: Despite our warnings, the U.S. congress wants to play hardball. We know how to play hardball, as well.

VERJEE: Like cutting off its air space the U.S. military, like it did with France and Canada, who passed similar measures. It could also end access to Incirlik Air Base, which the U.S. military uses to transport critical cargo and fuel supplies to Iraq.

CONDOLEEZZA RICE, SECRETARY OF STATE: The passage of the resolution at this time would, indeed, be very problematic for everything that we are trying to do in the Middle East.

VERJEE: And might open a dangerous new front in the Iraq War. Turkey wants to destroy Kurdish rebels, called the PKK, that have launched cross border attacks from Northern Iraq, killing Turks.

BAGIS: PKK for us is what Al Qaeda is to you.

VERJEE: And Turkish officials say if the U.S. won't go off after the PKK, Turkey will. Turkish helicopters crossed into Iraqi aerospace Thursday and troops are dangerously poised along the border.

(END VIDEO TAPE)

VERJEE: The secretary of state, Wolf, Condoleezza Rice is reaching out to the top Turkish leadership, trying to assure them that the U.S. is a strong friend and a very good ally and that Turkey is important to the U.S. She's also going to be reaching out to top House leaders, trying to convince them not to let the resolution go through in the full House -- Wolf.

BLITZER: Zain, lots at stake right now.

Thank you.

Let's get some more now on the history of this issue. In April 1915, the Ottoman Empire encompassed the general area of what is now Turkey. But it was disintegrating in World War I. Its Armenian population wanted independence and Russia actually encouraged it. Ottoman Turks considered the Armenian-Russian alliance a huge threat and targeted Armenians.

Between 1915 and 1923, Armenian leaders were rounded up and executed. Villagers were either driven out or killed. Independent historians have put the death toll somewhere between 600,000 and a million. Some have suggested even more. The Turkish government says no more than 300,000 people perished and that Armenians shouldn't count themselves as the only victims.

We're learning right now the surprising proposal to try to shake up the Bush's administration war on terror -- pulling the Marines out of Iraq and redeploying them to Afghanistan.

Let's go straight on our Pentagon correspondent, Barbara Starr.

She's watching this story for us.

What do we know about this idea -- Barbara.

BARBARA STARR, PENTAGON CORRESPONDENT: Well, Wolf, what we do know is it's just an idea by the Marine Corps. But so far, nobody is saying yes to it.

(BEGIN VIDEO TAPE)

STARR (voice-over): With more than 800 Marines killed in combat in Iraq and more than 8,000 wounded, the commandant, General James Conway, is raising an extraordinary idea -- it's time for the Marines to pack up and leave.

Senior military officials say it's just an option, but confirmed Conway is suggesting Marines withdraw from Iraq in the months ahead and leave the fighting there to the Army. In return, the Marines would take on major combat in Afghanistan.

The whole idea was received coolly by Defense Secretary Robert Gates.

ROBERT GATES, SECRETARY OF DEFENSE: My understanding is that it's, at this point, extremely preliminary thinking on the part of, perhaps, some staff people in the Marine Corps. But I don't think, at this point, it has any stature.

STARR: The early read in Congress wasn't much better.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: What this means is that the Army is not able to meet its deployment schedules. And, therefore, if the Marines move in to Afghanistan, those Army troops now in Afghanistan can be redeployed to Iraq.

STARR: Why are the Marines proposing the idea?

Violence is down significantly in Al-Anbar Province, where most of the 26,000 Marines now in Iraq are based. And the fight in Afghanistan mainly involves small units -- something more suited to the Marines.

A Marine who served in Ramadi thinks there are advantages.

UNIDENTIFIED MALE: They can narrow a lot of their focus and logistical trains and support operations.

(END VIDEO TAPE)

STARR: But, Wolf, the Corps is very sensitive to one criticism -- that they're packing up and leaving an unpopular war in Iraq -- Wolf.

BLITZER: Thank you, Barbara, for that.

Barbara Starr reporting.

Important developments potentially at stake right now.

Jack Cafferty is watching all of this and a lot more.

He's got The Cafferty File in New York -- hi, Jack.

CAFFERTY: The Army is taking in more and more recruits who have criminal records by granting them special waivers. Last year, 18 percent of recruits needed waivers because of problems with the law. That was up from 15 percent the year before. But the Pentagon defended its policies, saying most of the waivers were granted for misdemeanors like joy riding or violating curfew. Using marijuana, more than once also makes a waiver necessary.

In fact, the Pentagon insists its policy is strict enough that many members of Congress would have a hard time getting into the military today, which is probably a good thing, because if they didn't do a better job in the Army than they do than they do in the Congress, well, we wouldn't stand a chance in a war, would we?

Overall, 180,000 recruits joined the four branches of the military during the last year, which is enough troops to meet their needs. But officials noted that the Army also accepted fewer recruits who have graduated from high school.

So the question then is this -- what does it say about the state of the U.S. military if an increasing number of Army recruits have criminal records?

E-mail us at caffertyfile@CNN.com or go to CNN.com/caffertyfile -- Wolf.

BLITZER: Jack, thank you.

Stand by.

Up ahead, a booming black market in America's high tech military secrets. Some of them actually winding up in very unfriendly hands. You're going to find out what's being done.

Also, new video showing the chaos moments after a high school shooting. One student recording the noise and the confusion on a cell phone. We're going to show it to you.

Plus, more on the fireworks you just saw here in THE SITUATION ROOM during our Strategy Session.

What Ann Coulter said that some people are saying was anti- Semitic. You judge for yourself.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: He has a unique perspective on the United States as a neighbor and a sometimes partner tackling very controversial problems like immigration. Now that he's out of office, he's speaking his mind bluntly and he's raising some eyebrows.

And joining us now Vicente Fox, the former president of Mexico.

he's got a new book that's just out entitled "Revolution of Hope: The Life, Faith and Dreams of a Mexican President".

Mr. President, thanks very much for coming in.

VICENTE FOX, FORMER MEXICAN PRESIDENT: Wolf, thank you very much for the invitation.

I'm very pleased to be here.

BLITZER: Let's talk a little bit about a comment you made the other day, on Monday. It's generating some controversy and I want you to explain what you meant.

You said this: "The xenophobics, the racists, those who feel they are a superior race, they are deciding the future of this nation, referring to the United States."

What did you mean by that?

FOX: Yes, as long as, Wolf, we don't get a framework, a reform on immigration, there seems to be disorder, illegality and on this empty space of institutions (ph), not admitting the challenge and building this framework. What I perceive here is fear in this nation today. And fear is not a good adviser. And I don't think that fear should guide the decision on where the structure would come from (INAUDIBLE)...

BLITZER: So what you're saying...

FOX: (INAUDIBLE).

BLITZER: Excuse me for interrupting, but as long as there's no comprehensive immigration reform, you see xenophobics and racists, what, taking over?

FOX: Sadly.

BLITZER: But who are you talking about?

Who are you referring to?

FOX: Well, xenophobics like Minutemen in Arizona -- violent, aggressive and just against immigration and against Mexicans.

(CROSSTALK)

BLITZER: But do you think...

FOX: (INAUDIBLE) this today.

BLITZER: You really think that they are going to take over, they're going to be in charge of the United States?

FOX: No. No, no, no, no. But they are, in a way, guiding the process, because institutions are not meeting the challenges. We say in bull fighting, you have to take the bull by the horns. This a 100- year issue, immigration. And it can be an asset, a very strong asset to a nation. And it can be a win-win situation between Mexico and the United States.

BLITZER: Is there anyone running for president of the United States, on the Democratic or the Republican side right now that scares you?

FOX: No. No, no. Not at all. But I don't pay much attention to candidates and what they say when they are in a campaign, because later on, they just don't deliver. This manana, manana we deal with immigration, which is what I heard on my six years of government, is not up to the United States. The United States is a nation of action. And I am absolutely part of this nation. I love this nation and I want to see this nation leading on issues -- difficult issues like this.

FOX: Women, yes. Yes. Ladies. I mean it's what we need in this world in the 21st century.

BLITZER: So you think the United States needs a woman to be the next president?

FOX: I would love to see a woman leading this nation, yes, because compassion, vision, love, smart, talent. That can give us a drive toward that leadership that we're missing in the rest of the world from the United States.

BLITZER: Can we...

FOX: And leadership (INAUDIBLE)...

BLITZER: So we can take this as an endorsement, in effect, of Hillary Clinton?

FOX: No, no. Not necessarily. I...

BLITZER: But you want a woman?

FOX: This will be decided by the Mexican people (ph)...

BLITZER: But she's the only woman who is running.

FOX: I applaud woman everywhere, starting with my wife, Marta.

BLITZER: I want to play for you a question. I asked Lou Dobbs the other day to -- I told him you were going to be on this show and I said do you have a question you'd like to ask Vicente Fox. And he said he did have a question. And I want to you turn around and watch his question on the screen and listen to what he said.

(BEGIN VIDEO CLIP)

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Why is it that the Mexican government cannot come up with policies and execute policies that are in the interests of reducing the poverty and the dependency of the Mexican people?

Half the Mexican people live in poverty, Wolf.

Why in the world are they creating these sham arguments to export poverty and their own people from their country?

Have they no pride?

(END VIDEO CLIP)

BLITZER: All right. That's his question.

What's your answer?

FOX: Well, first of all, Lou, hello. He came down to meet me right there on the office...

BLITZER: He did a show from Mexico...

FOX: ...where I was being makeup.

BLITZER: Yes.

FOX: And he was very cautious (ph), very polite. We said hello. And he said here I am. You want to debate with me? I said, yes, of course. And he said, well, I'm ready. And I said me, too. But right now how about an agenda. But why don't you come down to San Cristobal?

We'll make the program there -- the debate and I'll take you to see so around, so that people is well informed, because the information you have is not true. We don't have 50 percent poor. We only have 4 percent only the $1 a day line and only 18 percent under the $2 a day line of income.

And we're working hard. I don't know -- I'm sure and I agree with him that we have not solved all of our problems. But we are advancing and advancing fairly rapidly...

BLITZER: Well, he's suggested -- he's suggesting in that question that you're trying to export your problems by sending Mexicans to the United States. FOX: Jesus Christ, what we love is our people in Mexico.

Who would be promoting exporting people when we need them in Mexico?

We need that talent and that productivity in Mexico.

BLITZER: So why are they, so many of them, wanting to come to the United States?

FOX: Well, because we just haven't been able to cope with building the opportunities for them. We used to grow at three-and-a- half percent a year population rate. And, today, fortunately, we're only 1 percent. Now Mexico is going to be able to cope with building the jobs, building the homes and building the university spaces that our people need.

I love my people here. But it's not the case -- I mean here everybody, they're seeing us, if you look backwards, most of us come from migrants. I mean we have a (INAUDIBLE) in that respect. Governor Schwarzenegger, I mean he is a migrant.

BLITZER: Well, the United States is a country...

FOX: He wants to be...

BLITZER: ...of immigrants...

FOX: He wants to be president of the United States.

BLITZER: ...as we know.

FOX: ...and they don't let him. I mean that's -- that's not fair. He should be able to run for president here.

BLITZER: But, specifically, the suggestion in Lou's question, you disagree with his fundamental premise.

FOX: Yes. Yes. And I told him so. And I told...

BLITZER: And are you going to debate him?

FOX: Of course.

BLITZER: What's the status of...

FOX: But he accepted that he would come down to Mexico. We just aren't going to agree to a date, because I want to take him to the communities, take him with people and take him with my friends, like that I met and that they have to leave their home to go looking for opportunities in Mexico City, the border or the United States.

BLITZER: I'm going to ask you, before we go, because our time is running out...

You write in your book, "Revolution of Hope," on page 291 you write: "On Iraq, I think that George W. Bush did what he deeply believed was right. The sad thing is that he was so deeply, deeply wrong."

You deeply believed he was wrong from the beginning. You've said so on many occasions. You write that in the book.

Did you ever call him up, pick up the phone and say to him George -- you called him George -- you are wrong, don't do this?

FOX: We discussed many times. And we did that and I did it, too, with the President Aznar, with Prime Minister Blair. They tried to convince me in. But I told them look, first of all, we don't have the proof of those massive destruction arms that you're talking about.

BLITZER: The weapons of mass destruction.

FOX: We have never seen the proof. Number two, what for did we create the United Nations? I mean that institution is precisely...

BLITZER: So you told him this was a bad idea and he said...

FOX: Absolutely.

BLITZER: He said to you -- what did he say?

FOX: Absolutely.

BLITZER: He said you're wrong?

FOX: Yes. Yes. No, no. He tried to convince me in. And I was saying look, this not right. Let's rely on the United Nations. Let's support the United Nations. Let's give them backup that they need and let them take there.

And, by the way, today -- today, I think that the United States should withdraw it troops from Iraq and let the Iraqi people decide their own fate. You remember that book which is embrace them and let them go. Good advice for parents. It's a good advice for nations. You already embraced it. You already took away the dictator, Saddam Hussein. Now let the Iraqi people decide their fate and let the United Nations supervise the process.

BLITZER: We just skimmed the surface.

The book is entitled "Revolution of Hope".

Vicente Fox is the author.

Mr. President, you really pour your heart out in this book. Thanks very much for writing it. Thanks very much for joining us.

FOX: Thank you very much, Wolf, and good luck. Gracias.

BLITZER: Up ahead, a frightening arsenal discovered. But even more chilling is the person who collected it. Place say it's a 14- year-old boy.

And making bombs, fighting a holy war -- this man says he's an American and he's helping train Islamic extremists. See the chilling video for yourself.

Then a lot more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Our Carol Costello is monitoring some other stories incoming into THE SITUATION ROOM right now.

Atlanta, Georgia, actually is in a drought of historic magnitude. That assessment today from the commissioner of Atlanta's Department of Watershed Management. The drought has already forced restrictions in 61 North Georgia counties. Commissioner Robert Hunter appealed for a conservation to protect the region's limited resources. Hunter says Lake Lanier, which provides water to a third of Georgia's residents, currently holds enough water for 121 days. He says the crisis is beyond extreme.

California cracks down further on smoking. A bill signed by governor Arnold Schwarzenegger yesterday would make it illegal to smoke in any vehicles carrying children. The measure seeks to reduce children's exposure to secondhand smoke. Motorists caught smoking with kids in the car could face fines of up to $100 per violation. The ban takes effect on January 1st.

In news impacting small business, companies around the nation are finding that sponsoring local sports teams can help their bottom line. That does include posting signs at Little League and football fields, as well as sponsoring individual teams. One Florida restaurant owner says team sponsorships create local exposure. He says another side bonus is a boost in employee morale.

That's a look at the headlines right now -- Wolf.

BLITZER: Thanks, Carol, very much.

Up next, God the flag and a new controversy involving the U.S. Capitol's official architect. We're going to show you what it's all about.

Plus, a threat some say is just as serious as terrorism -- high tech U.S. military secrets being sold to other countries. Tonight, the government is cracking down. We have new details. Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers in THE SITUATION ROOM.

Happening now, The word God can be used again on Capitol Hill flag certificates. The acting architect of the Capitol is changing the rules for the personalized certificates that are given with flags flown over the Capitol. There will be no restrictions except that they're limited to 300 characters.

The United Nations preparing a look for possible war crimes or crimes against humanity by U.S. security contractors in Iraq. U.N. officials will review fatal shootings of Iraqi civilians by private guards hired by the State Department. One high profile case involves Blackwater USA in the killings of 17 Iraqis.

And Wal-Mart counters what its CEO is calling emerging economic nationalism. He told a retailing conference Wal-Mart relies on low cost imports to keep consumer prices low. He says U.S.-made products are simply too costly for the company's sell for less model.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

High tech military secrets up for grabs by some of America's sworn enemies on the booming black market. The Justice Department now saying it's a very serious threat -- one it's about to try to crack down on.

Let's go right to our justice correspondent, Kelli Arena. Kelli, how big of a problem is it?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Wolf, it's a big problem. It has been for some time, and it's growing. Officials say that the United States is target number one for technology theft. And the Justice Department says China and Iran pose particular concerns, but they're certainly not alone.

KENNETH WAINSTEIN, ASST. ATTORNEY GENERAL: It is a threat that's carried out in the shadows and does not raise the same level of alarm as the violence of terrorist attacks or the sword rattling of a belligerent rogue state. But it is a very serious threat nonetheless.

ARENA: Last week a case involving the illegal export of f-14 fighter jet parts widely sought by Iran. Another involving miss and I will nuclear reactor equipment. Illegally sent to Pakistan. The justice department is creating task forces to crack down on the black market networks.

DARRYL JACKSON, ASST. COMMERCE SECRETARY: Our enemy has openly and plainly stated that they seek weapons of mass destruction and there is no doubt if they gain access to them they will use them.

ARENA: The first step, trained prosecutors whose don't want or don't know how to pursue such complex cases. Gary Milhollin, an arms proliferation expert, calls it long overdue.

GARY MILHOLLIN, ARMS PROLIFERATION EXPERT: We have seen a lot of cases where U.S. firms or U.S. citizens have illegally exported things to Iran and to China and basically we received a slap on the wrist or very little attention or no prosecution at all.

ARENA: Next, tighten restrictions on technology that can be used for multiple purposes like this. It is a triggered spark gap which can be used to blast kidney stones or trigger nuclear weapons.

Now, one big problem may be the U.S. government itself, Wolf. A recent Congressional probe found that agencies had difficulty coordinating investigations and agreeing on how to proceed. Now this new initiative is to designed to correct that. With so much at stake, Wolf, let's hope it works.

There's new some disturbing video that's coming out calling to mind the case of the Taliban American John Walker Lynn. This time a man believed to be an American caught in tape in Somali training for holy war.

Let's go to Brian Todd. He's watching this story for us.

Brian, what do we know about this man?

BRIAN TODD, CNN CORRESPONDENT: Well Wolf, we have a short clip of him that intelligence agencies are looking at now. His identity and how he got to that remote battleground in the war on terror are still a mystery.

A man with what seems to be an American accent, training with Taliban style group in Somalia. The young militant rails against the U.S. backed Somali and Ethiopian forces that his group has been fighting for power.

On this video, he's called Abu Monsor (ph), the American, a military instructor for the Islamic Courts Union, a group that's not formally affiliated with al Qaeda but has been accused by U.S. officials of harboring al Qaeda operatives. The group denies that.

In this video he tells American Muslims their brothers in Somali stood up to oppressive rule by the American backed warlords. He's later shown demonstrating how to make a bomb. The video was shot by Al Jazeera. CNN obtained it from the Middle East media research institute, a group that monitors and translates media from the Middle East, mostly from the Muslim and Arab world, and it is seen as sympathetic to Israel. CNN ran this by three different U.S. intelligence agencies. Officials tell us they are examining the video but could not immediately confirm who he is or if he is American. If he is, why would he join forces was a down but not out Jihadist group in an obscure corner in the war on terror?

KARIN VON HIPPEL, CTR. FOR STRATEGIC & INTL. STUDIES: I suspect he is one of these volunteers, just like John Walker Lindh, who really is taken by the movement. He, just like people are into extreme sports, if you go to Somali, you are a real thrill seeking Jihadi.

TODD: Somalia is one of the most chaotic battlegrounds with fragmented alliances. One terrorism expert who has been there says this young man probably doesn't understand those alliances, probably does not know his way around the country and likely has Somalis translating for him in the field.

Wolf.

BLITZER: You know, there are U.S. forces whose are there in the horn of Africa. This supposed American could he be, I know you have been doing a lot of reporting on this today, could he be actually used to go after Americans who are there?

TODD: Well, one expert says that does not seem likely right now. The group, the Islamic Courts Union, has been defeated now twice in Somalia. They are trying to regroup. Still it could happen. As this expert says this is asymmetrical warfare. This group could get lucky.

BLITZER: Brian Todd, thanks very much for that story.

Somalia, by the way, is located in the horn of Africa and the U.S. has a troubled history there as you probably remember. Back in 1992, American forces joined peacekeeping efforts in Somalia but Osama Bin Laden objected to the presence of U.S. troops in a Muslim country. He called for attacks on those American forces.

On October 3rd, 1993, fighting broke out with Somali gunman believed to be trained by al Qaeda. Two U.S. helicopters were shot down, 11 Americans killed in the clashes and leading the U.S. eventually to withdraw from Somalia. You remember, Blackhawk down.

Take a look at this. Police say they confiscated all these weapons from one person and that person they say a 14-year-old boy. We are going to tell you what authorities also say he was planning on doing.

And she has done it again. Ann Coulter is no stranger to making controversial statements. Wait until you hear what she's now saying about Jews.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Arsenal of weapons gathered by a 14-year-old boy. Right now police are trying to figure out exactly what he was going to do with all those guns. They say they stopped the Columbine-type attack.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well Wolf, only a moment ago the police pulled out. They had scoured the entire school, spent hours in there, making sure that everything is safe for tomorrow. They wanted to make sure that there are no hidden weapons in the school. And fortunately, they say there are none.

Now, they do have right now a 14-year-old boy under arrest, as you said, charged with planning a Columbine style attacks. This a boy who actually did not go to the high school here. He was pulled out of the middle school last term claiming he was bullied so the parents simply just pulled him out.

The police here, they are well aware of what school violence is all about because only last December, there was a shooting at another high school four miles away from here. So they have been in close contact with the student in the entire school district and let me tell you, it really did work. Because one of the boys at school here was approached by the boy under arrest. He was being recruited to participate in a planned attack. The boy spoke to his parents. They went to the police. And the arrest was made yesterday.

They checked out the boy's home and they found in his bedroom, they found 30 B.B. guns, seven handmade grenades, and a nine millimeter semi automatic weapon. That the police say and the district attorney says the mother purchased for her son.

BRUCE CASTER, MONTGOMERY CO., PA. DISTRICT ATTORNEY: People don't always use good sense. And I think that's what you have here. My suspicion is that we are going to find that the parents have a great deal of answering to do for permitting this to happen.

CHERNOFF: Nazi paraphernalia also was found in the bedroom. The D.A. says he's trying to decide whether to charge the 14-year-old boy as an adult and also investigating to see whether also he will file criminal charges against the mother.

Wolf.

BLITZER: I'm looking at that, the arsenal on the table. And let's show it to our viewers once again. It is amazing. Supposedly Allan, a 14-year-old boy can collect all of those weapons, all of them deadly, and there's ammunition to use them as well, is that right?

CHERNOFF: Wolf, I spoke only moments ago with a woman whose grandchild goes to the school. The woman told me that she knows the parents. She knows the boy. She actually said that she taught him karate. She says that he's a very, very troubled young man and he has been for quite some time. A boy who is overweight. She said he has been bullied for a long time and she said that he clearly had expressed a tremendous amount of interest in Columbine. I should also mention that videos of that Columbine attack were also found in his bedroom.

BLITZER: How a 14-year-old boy can collect all those weapons is beyond me. All right. You will do some more digging, Allan. Thanks very much. What a story.

The halls of Success Tech Academy in Cleveland, Ohio, are quiet right now but the scene was very different yesterday afternoon. As you probably remember, there was chaos when a 14-year-old boy in Cleveland opened fire. Warren Marks (ph) was in his math class. I want you to watch what he took with his video camera. I want you to watch this.

UNIDENTIFIED FEMALE: You all have to quiet down! Hey! Hey! This is not a joke. This is not a joke.

BLITZER: It certainly was not a joke. When the shooting was over two students and two teachers were wounded. The young shooter had taken his own life.

The Bush administration is reviewing its options after a federal judge stalled a plan to crack down on illegal workers through the people who hire them. That happened yesterday.

Let's go right to Mary Snow. She's watching the story. She's got some reaction to the judge's action.

Are employers, first of all, Mary, relieved?

MARY SNOW, CNN CORRESPONDENT: Wolf, they are but they certainly are not celebrating. Industries depend on illegal workers to survive and say without real immigration laws reformed their livelihoods are at stake.

From apple orchard owners in New York State to strawberry growers in California, farmers are relieved the judge ordered a temporary halt to the government's latest effort to crackdown on illegal workers. They say if the Bush administration gets its way, it could spell ruin.

LUWANNA HALLSTROM, COALITION FOR IMMIGRATION REFORM: They would choose criminals or to go out of business and/or possibly move their business outside of this country.

SNOW: It is not just farmers. Business owners and unions joined the fight against the administration's plan to send out no match letters to 140,000 businesses. The letters inform employers that some of their workers don't match the Social Security Administration's database. The message, fire the workers or face punishment. But even the government admits there are some times no matches due to a hyphenated name. Business owners are fearful it could open a can of worms. ANGELO AMADOR, U.S. CHAMBER OF COMMERCE: Let's say you fire a legal worker because DHS told you that if you didn't you would end up on jail and them that person turns around and sues you because of an error in the database.

SNOW: Homeland Security Department Secretary Michael Chertoff says if the no match is just a mistake then it needs to be fixed. But he dismisses objections by some businesses to the no match rule.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: They said there are a lot of illegal workers in the country and we are going to have to get rid of them. Well the answer is that's right.

SNOW: But a former INS commissioner says what's really need is immigration reform. And ideas like the no match rule don't work.

DORIS MEISSNER, MIGRATION POLICY INSTITUTE: This was an effort by government agencies to more stringently enforce existing law. And it failed. The courts have said that it is going beyond their legal authority.

SNOW: And in his ruling, a federal judge wrote that the government's no match rule as is would have resulted in irreparable harm to innocent workers and employers. The judge still must make a decision on a permanent injunction, though.

Wolf.

BLITZER: Would employers, Mary, be given a specific time to act?

SNOW: They have 90 days to comply. But some of these employers are saying they don't have the resources to do that and it's anticipated that about 8 million no match letters would be going out.

BLITZER: Mary Snow in New York for us. Thanks, Mary, very much.

Lou Dobbs is getting ready for his show that begins right at the top of the hour. I want to you tell our viewers, Lou, what you are working on. But before you do that, I want you to react, because as you know, we interviewed Vicente Fox, the former president of Mexico. I want to play a clip. He speaks very highly of you. I want you to listen to this clip and then we will talk. Listen to this.

I want to play for you a question. I asked Lou Dobbs the other day to -- I told him you were going to be on the show. I said, do you have a question you would like to ask Vicente Fox. And he said he did have a question. And I want to you turn around and watch his question on the screen and listen to what he says.

LOU DOBBS, CNN ANCHOR: Why is it that the Mexican government cannot come up with policies and execute policies that are in the interests of reducing the poverty and the dependency of the Mexican people? Half the Mexican people live in poverty, Wolf. Why in the world are they creating these sham arguments to export poverty and their own people from the country? Have they no pride?

BLITZER: That's his question. What's your answer?

VICENTE FOX, FORMER PRESIDENT OF MEXICO: First of all, Lou, hello. He came down to meet me right there on the office while I was being make upped. And he was very cordial. He was very polite. We said hello. He said here I am. You want to debate with me? I said yes, of course. Well, I'm ready. I said me, too. But right now I have an agenda. Why don't you come down, we make the program there, and the debate. And I take you to see around. So that people that's well informed, because the information you have is not true. We don't have 50 percent poor. We have only four percent under the $1 a day line and only 18 percent under the $2 a day line of economy.

BLITZER: All right. You get the point, Lou. What do you think?

DOBBS: First of all, the former president was very cordial in his own right. And I agreed to give him home-court advantage in the debate that we are going to set up. We will be down and in Mexico to have our debate.

Well, let's talk about that poverty line. There's nothing that can be lost here in translation, Wolf. Let me just quote to you, if I may, from Beatrice Zavala, who is the Mexican government's social development secretary and minister. 45 million Mexicans today lived in abject poverty. 14 million of those live in extreme poverty. That is incontrovertible. It is without question. And the fact is that I don't believe that the President Fox or for that matter President Felipe Calderon understands the impulse of what I'm saying, when I criticize Mexico's government for its policies and failures. It's in many cases, outright incompetence and corruption.

It is time for Mexico to behave as a mature, full partner this hemisphere. That means taking seriously border security. It means taking seriously economic development. And not acting as if it should perform as a plantation to illegal employers in this country who want to continue to subvert wages and for working Americans, who want to continue to provide a social safety valve for a Mexican government that's failed its people now for decades. It is time for a new beginning in this partnership between the United States and America. And now is the time and that's one of the things that I assure you that president Fox and I will be discussing.

BLITZER: We look forward to that debate, Lou. Tell us what's coming up at the top of the hour.

DOBBS: Absolutely. Tonight we are reporting on the warning about dangerous food imports from communist China. Congressional investigators say that food, imported from China, presents now "a clear and present danger to American consumers." We will have complete coverage.

Also tonight, a revolt by police officers in one of the largest cities of illegal immigration; officers demanding the right to report more illegal aliens to federal agents to protect their community and their citizens.

And you won't believe what members of Congress are arguing about tonight. Some are calling it redneck rash, NASCAR supporters calling it an outright insult. I call it outright ignorance and stupidity on the part of the United States Congress. We will be talking about that and I will be talking about it with two leading congressmen in fact. Two democratic lawmakers from New York will be here to tell us why they are going to tell the democratic governor of this state to go to hell on his idea to give driver's licenses to all immigrants.

Join us please for all of that, all the day's news and more at the top of the hour right here on CNN.

Wolf, back to you.

BLITZER: All right. Lou, thanks very much.

Conservative columnist Ann Coulter sparking some fresh outrage. She says that everyone should be Christian and hear her latest comments. That's coming up.

And what does it say about the U.S. military if an increasing number of army recruits from criminal records? That's Jack's question, the Cafferty File.

A lot more, all right here in THE SITUATION ROOM.

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BLITZER: Best-selling author Ann Coulter has raised more than a few eyebrows with her latest off the cuff remark. During an interview with CNBC's Donny Deutsche, the columnist and author took a sharp swipe at Jews. That's at least the way a lot of people are interpreting it.

Let's go to Carol Costello. She is watching this story for us.

What exactly, Carol, did Ann Coulter say this time?

CAROL COSTELLO, CNN CORRESPONDENT: Well you know Wolf, it was such an odd exchange; kind of giggly, flirty, uncomfortable. But clearly, at the interview as it wore on, Donny Deutsch, the CNBC host, who happens to be Jewish, was offended by Coulter's remarks. She intimated the U.S. would be a better place if there were not any Jewish people. She said that it would be better if Jews perfected themselves into Christians. Listen.

ANN COULTER, AUTHOR: It would look like New York City during the republican national convention. In fact, that's what I think heaven is going to look like. People were happy. They are Christian. They are tolerant. They defend America.

DONNY DEUTSCH, CNBC HOST: So we should be Christian, that would be better if we were all Christian?

COULTER: Yes.

DEUTSCH: We should all be Christian?

COULTER: Yes.

DEUTSCH: We should just throw Judaism away and we should all be Christians then?

COULTER: Yes.

DEUTSCH: Really?

COULTER: Well, it is easier. It's kind of a fast track. Do you know what Christianity is. We believe your religion but you have to obey.

DEUTSCH: No, no. No Jews?

COULTER: No. We think -- we just want Jews to be perfected, as they say.

DEUTSCH: Wow. You didn't really say that, did you?

COULTER: No. That's what Christianity is. We believe the Old Testament. But ours is more like federal express. You have to obey laws. We know we're all sinners.

COSTELLO: Donny Deutsch, not Danny. Sorry Donny.

Ann Coulter of course, as you may know, has a book out. It's called "If Democrats Had Any Brains They Would Be Republicans." It's in the top 10 on many best seller lists. Not many conservatives or republicans willing to comment on Coulter's comments. Some analysts telling me they feel they consider Ann Coulter like a crazy aunt, one that's best to ignore.

Wolf.

BLITZER: All right. Thanks very much. We will stay on top of this little controversy as well.

Let's go right back to Jack Cafferty in the meantime for the Cafferty file.

Jack.

JACK CAFFERTY, CNN CORRESPONDENT: What program was that on?

BLITZER: That was on Donny Deutsch's CNBC program.

CAFFERTY: Never heard of it.

Question this hour, what does it say about the state of the U.S. military if it increasing number of army recruits have criminal records?

Andrew writes from Germany, "I'm a soldier in the Army and the Army recruiting statistics mean that the war is taking a toll on people's desire to serve. I don't think joining the military is as appealing when you face multiple deployments in Iraq and Afghanistan. Lowering standards to maintain and grow the force is a necessary evil while fighting a war with an all volunteer Army."

Jane writes from Ohio, "It means it's time to institute the draft. If America is fighting the war on terror then all America needs to get involved. Otherwise, it is time to bring the troops home. What parent wants their son or daughter to enlist so they can live and serve with those with criminal records?"

Tom in Arizona, "It doesn't seem like a wrong idea to me. Once upon a time, judges would give young offenders a choice of jail or the service. Quite a few lives were made better."

Art from West Virginia, "Let's face it. John Kerry got in trouble for alluding to it, but it's the truth. If you're well- educated or have other career opportunities, joining the military is simply not going to be high on your list. Perhaps right after 9/11, some recruits were inspired by patriotism to join up but now in the face of a terribly flawed military policy and so many broken promises to our brave fighting men and women, even the enlistment bribes offered to those with little prospects elsewhere aren't enough and the recruiters are forced to relax their standards."

R. writes, "It means the Army of today is willing to accept pretty much the same standards of personal conduct from today's recruits that it accepted from the recruits that won WWII."

And Dan in Cincinnati, "It's a good thing because it makes their background more similar to that of the people who vote their funding."

If you didn't see your e-mail here, you can go to CNN.com/CaffertyFile where we post more of them online, along with video clips of the Cafferty File.

Wolf.

BLITZER: Jack thanks very much. See you back here in an hour.

We'll take a quick break. We'll be right back.

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BLITZER: See you back here in an hour. Let's go to Lou in New York.

Lou.

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